What’s the cost of NOT listening to customers?


monkey A company goes through a change at the top.  The new CEO comes from a financial background.  The new CEO institutes cost-cutting measures (after all, it’s what they know).  One item cut, all the customer feedback mechanisms – that means print surveys, point-of-sales surveys, and online feedback.  The company saves some money on cutting those items, but at what expense?

Is it a real loss after all?

I’m sure most readers will say that if they stop listening to customers then how will they know what customers want, or what customers think about their products and services, and what behaviors customers are exhibiting?  All valid points and probably true.  But the company could use other measures to track customer behavior such as revenue, purchases by segment, calls to customer support, and sales staff feedback.

What is the hidden price paid?

Think about the message the CEO is sending to the staff.  “We used to gather feedback, now we don’t, so maybe we don’t really care about our customers?”  It just seems natural to most employees to listen to customers.  For those not on the front-lines how else will they know that state of customer relationships?  For those on the front-lines how will they know if their experience is consistent with other front-line employees?  I have seen employee morale at companies like this really take a hit.  This change in policy, and how the void will be filled needs a good explanation from the new CEO to keep everyone on-board.

I’m all for cost-cutting measures if they make sense.  A real business leader needs to be able to balance cost-cutting with customer-caring.  I’ve yet to see a business only cut it’s way to growth…

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Why Customer Feedback Fails


With it so easy to collect customer feedback these days you’d think most companies would have an excellent “read” on their customers.  Unfortunately, that doesn’t seem to be the case (in my consulting practice).  While the increase in customer contact points (a.ka. listening posts) such as blogs, social media sites, online communities, and word-of-mouth have increased the quantity of customer feedback, many companies struggle with what to do with all this feedback.

We can understand part of the problem by looking at the results from a study investigating company usage of customer feedback by Respond (now part of CDC), which showed that:

  • 95% of companies collect feedback
  • 45% alert their staff
  • 35% use insights gained from the feedback
  • 10% deploy a change or improve processes
  • 5% tell customers they used their feedback

So what we have is a lot of activity (collecting feedback) but very little in the way of outputs (changes or improvements).  It is disappointing to see how few companies actually tell customers they used their feedback.  Maybe that is because they did so little with it.

So why so few outputs from customer feedback?

There are several reasons, and unfortunately none of them are as easy to solve as it was to collect the feedback in the first place.  Some reasons that come to mind are:

  1. The feedback mechanisms are poorly designed at the outset and deliver very little in the way of actionable insights.  Referred to as drowning in data, but starving for information.  Often times multiple tools that collect data at different customer touch points are inconsistent in their language rendering the data confusing.  Useless information is collected that only adds complexity to the interpretation of the data.
  2. There is no process outlining what to do with the data once it is collected.  There is no clear owner of the data, there is no accountability to make improvements based upon the feedback, and there is no mechanism to track improvements.
  3. Probably the most important, is the company itself does not have a culture of valuing customer feedback. I once had a CEO tell me that if a customer contacts him directly that his processes have failed!  He did not want to talk to customers directly, and as a result he now had a significant customer relationship problem on his hands.  Part of a healthy customer-centric culture is having clearly understood mechanisms for integrating customer feedback into employee compensation programs.

None of these are easy fixes, but if you truly are a customer-centric company you need to put customer feedback at the heart of your business.  To make sure it all works, keep it simple, make it all consistent, and make it part of your culture.  To accomplish all that you need to do your best to be able to correlate changes in customer feedback (leading indicator) to changes in the way you measure your business (lagging indicator).  If you don’t, make sure there are plenty of flotation devices around so you don’t drown in your data.

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What Divorce and Customer Loss Have In Common


Stop Believing What Your Customers Tell You

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it’s usually sales reps that report the loss, it’s easier to report price as the issue since it’s beyond their control.  Second, it’s easier for customers to claim price as the issue as it’s harder to dispute and doesn’t cast blame on sales.

Divorce and Customer Loss

I can’t find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it’s usually not financial.  It’s just that it’s easier to say that, it’s less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It’s just easier to use price as the excuse.

It’s hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It’s hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn’t want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite “moved out of area” as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It’s just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news – if you don’t really know what your customers think of your customer service you may be headed for a trial separation or a divorce…

How to Get Rave Reviews on Your Customer Reviews


It’s no surprise that a customer will eagerly look for a review or a recommendation prior to making a purchase.  It’s not a surprise either that the Internet has made that so easy.  Nielsen tells us that consumer recommendations are the most credible form of advertising.  78% of us trust consumer recommendations above any other form of advertising.  What I find more interesting is that only 61% of us trust consumer opinions posted online – a 17% difference.

Why the difference you ask?  Even if you didn’t ask, here is my take:

“It comes down to trust, and the most trusted source for information about a company and it’s products for consumers comes from someone like themselves. (AdAge)”

So the key to getting rave reviews on your customer reviews rests in your ability to provide customers the ability to determine how much the review writer is like themselves.  So some do’s and don’ts:

Don’t:

  • Have your marketing people write your reviews, or put up a “sponsored” review that reads like a marketing message.  Consumers can see through that “overly glowing” review and will not trust other positive reviews on your site, or any other messaging for that matter.
  • Remove negative reviews from your website.  Consumers understand that not all reviews will be positive.  Have no negative reviews can often raise warning flags.  Let customers see the nature and content of the negative reviews.  Give your customers credit for their ability to discern what is fair.
  • Don’t reply to negative reviews with excuses.  Instead, reply by acknowledging the customers complaint and respond with a fair solution.

Do:

  • Summarize the scoring of your reviews and let customers see the distribution of reviews.  Let them see if all reviews were 5’s and 4’s or if they were all 5’s and 1’s.  These two views of customers reviews for video game consoles tell different stories.  The one for the Wii has a much higher percentage of 5’s and 4’s and a lower percentage of 1’s than the one for the Xbox.

  • Let reviewers tell customers a little about themselves so the customer can know how much the reviewer is “like themselves.”  Your products/services can’t be all things to all people.  The review format from Sierra Trading Post does a nice job of letting a customer know more about the reviewer by asking them to describe themselves and their “gear” style.

  • Let customers vote on reviewers content, as well a flag potentially problematic reviews for things such as profanity, spam, duplication, content problems, etc.
  • Use customer reviews to improve your product/services, and let customers know it was their reviews that helped.

Remember to focus on building trust, demonstrating transparency, and being an advocacte for your customers (doing what’s best for your customers) and you’ll be well on your way to getting 5 stars for your reviews.

Verizon vs. Earthlink – The Good, The Bad, and The Policy


good_bad_ugly.jpg  Here are two very different experiences I recently had with Verizon and with Earthlink.  Since they are both in the communications industry, it’s worth looking at what one got right and what one got wrong, very wrong.

Verizon – The Good:  I have a smartphone manufactured by UT Starcom that caries the Verizon label.  I was having trouble synching my phone with MS Outlook.  I called UT Starcom and they suggested downloading a recent software update. I did, and once it was installed the voice-recognition function stopped working.  A call back to UT Starcom left the head of tech-support at a loss for a fix.  I asked if I could download the original software that came with the phone.  He said that was not possible, so I was now stuck with a phone missing a funtion I used all the time.  Next, a call to Verizon to see if I could download the original software from them turned out to be no-go as well.  Here is where it gets good.  The Verizon agent offered to ship a refurbished phone with the original software at no charge and I would receive it in one or two days!  In return, I needed to return my old phone to them and the box that my new phone would come in would have a pre-paid shipping label.  A refurbished phone was not ideal, but I would get what I wanted, at no charge, in a day or two.  My problem was resolved with one call. Now that’s good! 

Earthlink – The Bad:  I’ll spare you all the details.  Partly becasue they are lengthy, and partly because I don’t want to relive the nightmare.  My initial call to Earthlink was to request an upgrade to their 6.0 Mbps broadband service from the 1.5 Mbps service I had.  One week after placing the order I had heard nothing. So I called to follow-up and  found out I wasn’t close enough to their switch to qualify.  Why couldn’t they tell me that when I called the first time?  Over the next several weeks I had to place a series of calls to get downgraded back to the 1.5 Mbps service, and to get a refund for the new modem that one senior rep offered me at no charge as compensation for all the hassle I experienced. (By the way, the only reason I got to this senior rep was due to a survey I filled out that gave them the worst marks possible)

Earthlink – The Policy: The first two times I called about reversing the modem charge I was told it was their policy to require a long-term contract to get a modem at no charge.  I told them the original rep did not mention that policy.  At this point I had spent about 11 hours of my time to get all my issues resolved.  I finally spoke to a senior billing rep who reversed the charge for the modem!  Ahh, so much for their policy. At this point though, I was beyond rescuing.  It just takes a while to change Internet service so I have to stay with Earthlink for a little longer.

Things Worth Noting:

  1. When it comes to customer support, do your best to have some idea what each possible resolution will cost, in time, materials, and word-of-mouth.  I imagine Verizon knew that the cost of sending me a refurbished phone would be less costly than the resources required to handle the multiple calls I would make into customer support if they hadn’t.  Also, their first-call resolution stats will look good, and they will have a happy customer.
  2. Customer Surveys – With Earthlink I must have made 20-25 different phone calls.  I recived 3 email surveys asking me how the call went.  Sounds like they send surveys out randomly.  However, I noticed that the survey requests only showed up following calls that seemed to go OK from the reps perspective.  Survey requests should either be sent to all your customers, or be sent in randomly.  Letting customer support reps decide when to send a feedback requests isn’t random, and it will certainly bias your results.  Especially if reps are compensated on survey results.

PS – Please send me email to my gmail address – my earthlink one will stop working shortly.

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The Starbucks Customer FEEDBACK Experience


starbucks_header.jpg  This “Starbucks” project is now in full swing with some new posts by Becky Carroll, Jay Ehret, Doug Meacham Maria Palma, and Meikah Delid. We are starting to learn more about the changes that Howard Schultz is going to make to get Starbucks and their customer experience back on track.  So I took it upon myself as a customer feedback “specialist” to evaluate the experience of filling out one of the customer comment cards at my local Starbucks.

I filled out the card (pictures below) and said I would love to hear more about these changes that Howard Schultz is talking about and what it means to me as a customer.

                                          starbucks_form_outside.jpg     starbucks_form_inside.jpg

Here are my thoughts on the card and the process as a whole:

  • The card is well designed with plenty of space to share my thoughts.
  • The card asks you to seal it shut and mail it back to Starbucks Corporate.  Some problems as I see it:
    • Sealing it shut and having me mail it back means I have to find a mailbox.   The guy at the counter did offer to mail it in for me – so kudos to him, but what if I hadn’t asked him about what to do with the card.
    • Mailing it in prevents the store manager from seeing my comments the same day.  It would be better to have a nice box (coffee bean container perhaps) in the store where I could drop the card off.  The store manager can look at the cards daily, contact customers directly if it makes sense, and then send cards to corporate for recording or additional contact.  Sometimes it’s best for customers to talk directly with the store manager instead of a corporate spokesperson. 
    • Mailing it in also means I have to wait for a reply.  I got my call back about a week later, and if there is a problem, that is too long to wait to hear back.  The card does say “Our partners (empolyees) are here to help.  If for any reason you are not satisfied, please let them know.”  This is intended to get the customer to talk to the employees right away if there is a problem.  Some customers just don’t want to mention problems directly or in-person.  Allowing customers to drop off the card at the store gives the store manager the chance to contact the customer and resolve the issue within a day or two.  The likelihood of gaining a loyal customer, one who will endure occasional bad experiences, is increased as the customer builds a relationship with the store employees instead a corporate spokesperson.
  • Kudos to the staff at the store.  It just so happens that the store manager was there but not on the clock.  The guy at the register who I talked to said if you want to talk to the manger there she is – I approached her and she was very professional and took the time to chat even though she was’t really working.
  • The corporate customer relations person that called me back a week later was excellent.  He was professional, knowledgable, and appreciative of my interest.  He shared with me all the publicly released info about the upcoming changes:
    • Organizational realignment – press release
    • Free wi-fi for 2 hours per day
    • No more breakfast sandwiches – heating them produced an unwelcoming arome of cheese, etc that customers didn’t appreciate with their coffee.
    • The in-store all partner training event on February 26 – press release
    • The release of the five key strategic customer-facing initiatves at the March 19th Annual Meeting.

Stay tuned for more.  If nothing else, I’m a lot more productive with all this in-store coffee research I’m doing …

Giving Senior Executives More Insight from NPS


blue_bulb1.jpg  The Net Promoter website describes the Net Promoter Score (NPS) as providing “the single most reliable indicator of a company’s ability to grow.”  There has been an on-going debate about how true this statement is and the real value of NPS, particularly for senior executives.  To better understand some of what the debate is about, check out this post at Marketing ROI and the posted comments.

I have been using NPS with clients for a couple of years now, and I’m not convinced yet that it is the best indicator of a company’s ability to grow.  The real work is figuring out what drives the likelihood to recommend for each business, and then measuring the actual recommendation behavior and corresponding purchase behavior of customers.  That is more than a blog post, so on to what you can do right now to get more value out of your NPS work…

As a quick review, NPS is calculated by first asking the following question with a 0 to 10 point answer scale:

“How likely is it that you would recommend (Company X) to a friend or colleague?”

Then you take the percentage of customers who are promoters (10’s & 9’s) and subtract the percentage who are detractors (6’s – 0’s):

% of Promoters – % of Detractors = Net Promoter Score (NPS)

To get additional customer insight, I also pair it with the following question:

“What was the most important factor that influenced your score above?”

What I like to present to senior executives is a summary of the answers to this question from the detractors.  Yes, they also get to see the comments from promoters, but they are already aware of this perspective.  There is often more value found in reading the detractors’ comments.  This tells executives what customers don’t like about their business or products and services.  This feedback contains the real voice of the customer, and often they are pretty blunt comments.  We all like to know what we do well, and we need to keep doing those things; but real insight, and real growth often comes from improving what is really wrong with a business.